Gold prices in India witnessed a spectacular rally on Wednesday, mirroring a powerful upswing in international markets. The precious metal's price surged by a significant Rs 3,040, pushing it to a notable Rs 1,33,000 for 10 grams of 24-carat gold. This sharp increase was primarily fueled by robust global cues and a concurrent weakening of the US dollar.
What Drove the Precious Metals Rally?
The domestic bullion market took direct cues from a strong overnight performance in global markets. Internationally, spot gold prices climbed, breaking past the key psychological level of $2,400 per ounce. This surge was largely attributed to growing market expectations that the US Federal Reserve might initiate interest rate cuts later in the year. Such expectations typically weaken the US dollar and make non-yielding assets like gold more attractive to investors.
Analysts pointed out that the softening of the US dollar index, which measures the greenback against a basket of major currencies, provided a major tailwind for dollar-denominated commodities like gold and silver. Furthermore, persistent geopolitical tensions in the Middle East and ongoing central bank purchases continued to underpin safe-haven demand for the yellow metal.
Detailed Price Movements Across Indian Cities
The price surge was reflected uniformly across major Indian markets. In the national capital, Delhi, the price of 24-carat gold soared by Rs 3,040 to settle at Rs 1,33,000 per 10 grams. Similarly, 22-carat gold followed suit, trading at Rs 1,21,900 for the same quantity after an increase of Rs 2,790.
The rally was not confined to gold alone. Silver, often referred to as 'poor man's gold,' also experienced a substantial price jump. In Delhi, the price of silver skyrocketed by Rs 4,100, reaching Rs 84,400 per kilogram. This impressive gain in silver prices underscores the broad-based bullish sentiment in the precious metals complex.
Futures Market and Broader Economic Context
The bullish momentum was equally evident in the futures market. On the Multi Commodity Exchange (MCX), the most active gold contract for June delivery traded significantly higher. It was up by 1.86%, or Rs 1,342, at Rs 73,485 per 10 grams during the trading session.
This price movement occurs against a backdrop where domestic gold prices have been hovering near all-time highs. The recent rally adds to the metal's strong performance over the past year, driven by a combination of global monetary policy shifts, economic uncertainty, and sustained physical demand from key consumers like India and China.
Market experts suggest that the trajectory for gold remains cautiously optimistic in the near term. The focus is squarely on upcoming US economic data, particularly inflation figures and job market reports, which will heavily influence the Federal Reserve's future policy decisions. Any further signs of economic cooling that reinforce rate-cut expectations could provide additional support for gold prices. However, traders are advised to remain vigilant for potential profit-booking at these elevated levels.
